The False Myths of Gold & Silver Bulls Promoted by Gold & Silver Bears

For those that think gold and silver bulls are perpetually
long gold and silver no matter the present condition of the PM markets, that is
a patently false notion. In regard to the recent steep silver correction, an
asset that periodically has steep corrections every year (the majority of which
are induced and engineered by corrupt bankers) does not a bubble bursting make.
Personally, I have been a gold and silver bull since 2005 (admittedly a little
late to the party but still far enough ahead of the curve). Since that time, I
have grown to know many precious metals bulls that were bulls for an even longer
period than I. And what I’ve learned is the following. Those among us that
understand the Central Banker effort to transfer wealth to the top 1% of people
in their country through their Ponzi reserve fractional banking schemes, their
constant schemes to devalue fiat money, and their unfair manipulation of stock
markets, have NEVER advocated staying long at all times in all precious metal
assets during the current gold and silver bull.  Despite bankers’ allowances for paper gold and paper silver
to be substituted for physical gold and physical silver in their Exchange of
Futures for Physical (EFP) transactions and their clever invention of
unregulated paper derivative commodity products that are hardly backed by any
physical product, gold and silver has rebounded every year from banker attacks
to keep trending higher. And the uptrend is still not only intact but it is intact
and strong.

In fact, among all those I know that have been long-term
gold and silver bulls for at least 6-10 years, all of us adequately manage the
volatile downside engineered manipulation of gold and silver futures quite well
most times with temporary hedging strategies that combine shorting gold and silver,
cashing out, and/or buying puts on mining stocks/ETFs.  Yes the intelligent silver/gold bulls
among us will always have core positions in gold/silver whether that core
position consists of just the physical metals, a fraction of the mining shares,
or a combination of both physical and mining shares.  But the intelligent silver/gold bulls will also fully expect
banker manufactured price suppression schemes executed against gold and silver
to occur every year without fail as well. However, since we have understood
this global fiat monetary crisis for so long and have accordingly been precious
metal bulls for many years now, due to our cost basis in gold and silver that
remains far below the banker-manufactured steep drops in the price of paper
gold and paper silver, the recent steep drop in silver is rendered nearly
irrelevant (for example, for my newsletter subscribers that have been with me
since the launch of my newsletter, the cost of silver, even after this dip, at
$38 a troy ounce today, is still more than a couple hundred percent above our
cost basis).

For some odd reason, gold and silver bears often assume that
gold and silver bulls are unidirectional traders that always buy gold and buy
silver no matter what direction gold and silver are heading and that they continue
to blindly buy into short-term peaks. This assumption, besides being patently
false, is an assumption with very little merit. Sure, there may be some among
gold and silver bulls that buy heavily into short-term peaks but there are
likely far more investors, from a historical perspective, that have heavily
bought into short-term peaks in major stock market indexes right before they
collapsed than those that have committed the same error with precious metals
markets. Consider this April 23, 2008 article in which I warned of a very
strong possibility of an imminent severe crash in US markets.

Just 18 trading days after I posted the article, the US
markets began a 50% decline, yet the majority of comments that followed my
article reflected very strong bullish sentiment towards the US markets. I
consider myself a gold and silver bull yet have never suffered huge losses even
in years when my newsletter portfolio has been heavily over weighted in
gold/silver mining shares and gold/silver mining shares ended the year heavily
down. For example, in 2008, when stock markets crashed, I managed my Crisis
Investment Opportunities newsletter so that it still returned a small gain
versus the very large 38%+ losses of most global major indexes and the very
substantial -28.56% loss of the PHLX Gold/Silver Sector Index. In the following
year, when the PHLX Gold/Silver Sector Index rebounded significantly and
returned a very substantial +37.55%, I still managed the downward volatile
periods in gold/silver to end the year with an even greater +63.32% return. A couple of weeks ago, on
April 26, 2011, I sent a very comprehensive warning to my Platinum Members. A very brief excerpt of that warning is below:

"I can’t see the bankers letting this opportunity go to
waste, now that they have sold down silver by 10% already…As they say, to catch
a criminal, you have to think like a criminal, so here is what I think will
transpire the rest of this week. 
If I were a banker, silver at $50 absolutely mortified me and gold over
$1,500 further mortified me. If I were a banker, I knew that if I didn’t cap
the rise yesterday, there was going to be no way out from the huge short
positions I hold in gold that expire in June and the huge short positions I hold
in silver that expire in May and July. Thus, my best plan, and probably only
hope, to exit those gold and silver short positions, is to attack gold and
silver right now. Furthermore, if I were a banker, I would also take down
mining shares as much as I could right now to keep people from investing in
them in the future, especially with all the talk about the underperformance of
the mining shares’ performance when compared to the metals. Drag down the
mining shares now and that should keep people out of the mining shares for a
while.”

After I issued that warning, silver dropped more than 27% in
the next 7 trading days, and as I predicted, the mining shares were hit hard as the Amex HUI Gold Bugs index shed more than 9.38% and the PHLX
Gold/Silver Sector Index shed more than 9.59% over the next 8 trading days.
Foreseeing this activity, in preparation for the annual banker attack against
gold and silver, I employed extremely tight trailing-stop-losses in my
newsletter that moved many of our mining shares into cash at near 52-week tops and
we also shorted silver on a short-term play and exited this position one day
prior to a very significant silver rebound for a short-term 37% gain. In
addition, during the severe silver pullback, my private consultation clients
recently employed GLD ETF puts that we deployed for two days only and then exited
at about 60% profits and many of my Platinum clients recently exited a very significant
position of silver shorts  last week at 125% to 135% gains in just a few
days. While true that it is impossible to perfectly catch the tops and bottoms
of steep corrections in gold and silver often manufactured by bankers, by
understanding banker manipulation schemes of PAPER gold and silver derivative products
that they execute specifically to scare people away from investing in gold and
silver and to benefit the shorts they hold against gold and silver, it is very possible to avoid the bulk of these huge corrections that
happen every year and even use them to your advantage.

Those that refuse to acknowledge the heavy intervention of
bankers into gold and silver markets seem to be among those investors that are
caught off guard every year by steep gold and silver corrections. At
SmartKnowledgeU, we have been able to consistently outperform the gold/silver
sector every year quite significantly even though we tend to be very heavily
concentrated in gold and silver from year to year because we have intensely
studied and understand banker manipulation schemes executed against silver and
gold. From launch of my newsletter in June 2007 until April 28, 2011, my
newsletter has cumulatively returned, in a tax-deferred account, 221.73% with
very low turnover as compared to the +59.08% return of the PHLX Gold/Silver
Sector Index during the comparable investment period. I know that there will
always remain people that I will never ever be able to convince of the
existence of banker take down schemes executed against gold and silver
primarily with the use of paper gold and paper silver derivative products. While we would ideally prefer to end these banker manipulation schemes that create great price distortions
in gold and silver to the downside (yes, gold and silver bears, they create
downward price distortions!), and we certainly have put in our fair amount of
work in exposing these schemes for six years running now, if we can’t prevent
them, we certainly will ensure to our best ability that they don’t hurt us.

Central Banks execute these takedowns primarily in the fake
and bogus paper market because they do NOT want to sell any of their REAL
PHYSICAL PRECIOUS METALS as reflected by the fact that they became net
accumulators of physical gold in 2010 and remain net accumulators of gold in
2011 after two decades of being net sellers.  This divergence between the price of paper PMs and the
actions of Central Banks is precisely the reason why Silver Eagles and Silver
Maple Leafs continued to sell for anywhere between an 8% to 12% premium above
the paper price of silver all throughout the recent banker executed take down
in the paper silver markets.

If banker manipulation of gold/silver didn’t form such
well-developed predictive patterns and if I didn’t know that I can always depend
on “regulators” like the CFTC, the CME and the SEC to aid and abet
these take down schemes, there would be no way in the world that my newsletter
could have outperformed the PHLX Gold/Silver Sector Index by more than 162.65%
in an investment time span of less than four years.  To say that I’ve been heavily concentrated in PMs for five
years now and that I’ve been able to outperform the PHLX Gold/Silver Sector
Index significantly every year based upon pure luck rather than accepting that
my outperformance is based upon my knowledge of banker manipulation schemes executed
against gold and silver would seem to be more apropos of a conspiracy theory
than the opposite side of that equation.

Among the long-term investors in gold and silver that view
physical gold and physical silver as a store of value and that don’t trade
gold/silver as the speculative commodity it is not, these huge sell-offs do not
cause weeping and gnashing of teeth among a great many gold/silver bulls as the gold/silver bears often erroneously
presume. Just because we are gold/silver bulls does not mean we are perpetual
gold/silver cheerleaders every hour of every day of every year.  That would be foolish, especially in
light of our acknowledgement of banker price suppression schemes executed
against gold and silver through paper markets. In fact any gold/silver bull
that has done his or her homework should fully understood the banker
manipulation game of gold and silver and understand when and how to hedge for
these occurrences to preserve capital for the next ride up.  True gold/silver bulls understand that
we can use this volatility to sell high and buy back low at least once a year
if not a couple of times a year. As far as the latest “hit” on silver, I would
fathom that the US Federal Reserve had a very large role in colluding with the
CME to raise silver margins and that they helped direct the latest takedown in
silver specifically to bail-out the enormous bullion bank short positions in
silver that would have been impossible to unwind had it not been for the most
recent episode of  “today in banker
take downs of precious metals” (especially given the lack of physical silver
backing the bullion banks’ short positions).

Don’t ever forget that on July 24, 1998, former Federal
Reserve Chairman Alan Greenspan, in testimony before the House Banking
Committee, when informed of the huge gold short derivative positions held by
bullion banks that could potentially bankrupt them if gold moved upward,
stated: "Central Banks stand ready to lease gold in increasing quantities
should the price [of gold] rise." Now that central banks are net
accumulators of physical gold and want to hold on to their gold, people should
realize that Central Banks, with the help of corrupt regulators that are really
allies of banks, “stand ready to raise margins at a ridiculous pace and with
ridiculous frequency should the price of gold or silver rise.”

P.S. I’ve been working on two short books that further
expose the anti-gold and anti-silver promulgated banker propaganda and will be
releasing them online soon at a very nominal cost.  I plan to donate 100% of the profits from the sales of these
two books to charitable causes and the provision of microloans to help people
in developing countries. I will provide more details upon the release of these
two short books, so please stay tuned for further information.

About the author: JS Kim is the Chief Investment Strategist
for SmartKnowledgeU, a fiercely independent investment research, education,
& consulting firm that helps clients position themselves properly to profit
from the ongoing global monetary crisis being executed by the world's Central
Banks.

Comments

[swamp]

Keep drinking the kool-aid. 

[bigwavedave]

of course it makes sense. a few of us are looking at offering some products with payment received in silver oz. generic stuff like beef jerky, pemmiccan and rottwielers. 

[66Sexy]

Lets just call a spade a spade.

That "correction" was nothing of the sort..

It was a 'shakeout'...